Question

Larry accumulated $3,000 in credit card debt. If the interest rate is 10% per year and he does not make any payments for 2 years, how much will he owe on this debt in 2 years for quarterly compounding? Round your answer to two decimal places.

Answer 1

Answer:

The amount will be "$3655.21".

Step-by-step explanation:

The given values are:

Principle,

P = $3000

Interest rate,

r = 10% i.e., 0.1

Number of times interest,

n = 4

Time,

t = 2 years

As we know,

⇒ $A=P[1+\frac{r}{n} ]^{tn}$

On putting the values in the above formula, we get

⇒    $=3000[1+\frac{0.1}{4} ]^{2\times 4}$

⇒    $=3000[1+0.025]^8$

⇒    $=3000\times 1.2184$

⇒    $=3655.21$ ($)